Lawsuit Threatens To Entangle Radisson Hotel

February 26, 1989|By JOE BARRETT Staff Writer

An attorney has asked a Richmond Circuit Court judge to seize developer Jack H. Shiver's interests in 10 partnerships, including the group that owns the taxpayer-backed Radisson hotel in downtown Hampton.

The request to place Shiver's interests in the hands of a third party is the result of a complex 2-year-old lawsuit brought by investors in a partnership Shiver helped form in the late 1970s while working for Quadel Corp., a Maryland-based development firm.

FOR THE RECORD - Published correction ran Wednesday, April 26, 1989. On several occasions, articles in the Daily Press and The Times-Herald have said that Hampton is obligated to lease the Radisson Landing parking garage for 10 years at $400,000 per year. The city must lease the garage for 15 years.

The lawsuit alleges that the partnership's general partners sold a luxury apartment complex in northeast Alabama and squandered the nearly $1 million in profits instead of distributing them to the limited partners.

Under the agreement that formed the partnership, the limited partners are merely investors. The general partners manage the partnership's affairs.

Shiver is not being accused of wrongdoing in the lawsuit because he left Quadel six years before the apartments were sold.

But a Circuit Court judge ruled in November that Shiver was accountable along with the other general partners for $870,000 of the sale because he had not filed the proper paperwork to have his name removed as a general partner.

Shiver is appealing that ruling to the state Supreme Court.

"I wasn't even there and couldn't do anything about it either way," Shiver said last week. "It's certainly something that you wish wouldn't happen."

Hampton officials are stymied about what effect Shiver's legal problems might have on hotel operations or the city's more than $8 million investment in the hotel.

"I just don't know enough to know whether there are any implications for us," said City Manager Robert J. O'Neill Jr. O'Neill said two weeks ago that the "hotel would practically have to be in receivership" before the city's investment became endangered.

"There are so many ifs that you could get involved with," said City Attorney A. Paul Burton. "I don't know that there is any way for me to tell."

The circuit judge who will rule on whether to grant the attorney's request to seize Shiver's interest in the partnerships has not yet set a hearing date either.

The request - called a "charging order" - asks that Shiver's interest in the hotel, a Newport News apartment complex and other projects around the state be placed in receivership until Shiver or the other members of Quadel pay the $870,000 settlement.

A receivership is a third party who takes over control of the property and has the authority to sell off parts until the settlement is paid.

Attorney Jack E. McClard, who filed the request with the Richmond Circuit Court clerk's office on Jan. 19, said he is also attempting to get the money from the firm's other general partners.

Those other partners include Thomas D. Webb of Rockville, Md.; Norman V. Watson of Chattanooga, Tenn.; and the Heritage Association based in Richmond. The state Corporation Commission had no record of the Heritage Association.

"We've worked out a settlement of sorts with the others," McClard said. "If we're able to collect the money from them, Shiver will be off the hook to that extent."

McClard declined to elaborate on the details of those settlements. He did say that to his knowledge none of the other defendents had declared bankrupcy.

Shiver's attorneys will likely file a response to the request and then a judge will hold a hearing on the order.

McClard concedes that Shiver appears to be being held accountable for something with which he had nothing to do.

"That's certainly one way of looking at it," he said. "The other way to look at it is that if he was a general partner, he had a responsibility to see that everything was right."

In legal briefs filed with the Circuit Court in Richmond, Shiver's attorney argued that under the partnership agreement once a general partner left Quadel as a manager, his interest in the Alabama apartment complex would revert to a limited partner's status.

Since Shiver left Quadel in 1980 to come to Hampton to set up his own business, he should therefore be considered a limited partner and not be held liable for the lawsuit.

But McClard, attorney for the limited partners who are owed the money, argued that the partnership agreement does not supercede Maryland law, which would have required the partnership agreement to be amended to change Shiver's status. Shiver never did that. He therefore remains a general partner.

Circuit Judge T.J. Markow agreed with McClard and ruled that Shiver was as accountable as the other parties.

"I think it's a technicality," Shiver said. He hopes to have the decision overturned in the state Supreme Court.

Shiver's legal problems threaten to throw a road block on a long and successful career in both the public and private sectors.

Shiver has a bachelor's degree in mathematics from Florida State University and two years of graduate work in economics.